At least one ministry has explicitly rejected a proposal for limiting fuel imports submitted by state-owned energy giant PetroVietnam, whose products have been struggling to compete with cheap imports, local media reported on Friday.

In a letter to the government, the Ministry of Planning and Investment said PetroVietnam will hold a monopoly on the supply of oil products, if the proposal is approved, forcing local businesses to buy its products and allowing them to make imports only when local supply cannot meet their demands, according to Tuoi Tre newspaper.

The proposal is not in line with Vietnam's commitments to free trade as a member of the World Trade Organization, the ministry was quoted as saying.

Despite not expressing its opinion as clearly, the Ministry of Industry and Trade dismissed PetroVietnam's estimate of local demand for oil products as "low," the newspaper reported.

In its proposal, the energy company said its two refineries will churn out around 18.1 million cubic meters of oil products when they are fully operational in 2018, compared to the total demand of some 17.3 million cubic meters.

However, in a national plan for the development of Vietnam's oil and gas industry approved by the government last October, the country's demand was estimated 21.2-26 million cubic meters in 2018-22, according to the ministry.

While PetroVietnam is expected to open the country's second refinery, now developed in collaboration with Japanese and Kuwait investors, next year, it has been struggling to prevent its wholly-owned refinery Dung Quat from shutting down.

In its recent letter to the government, PetroVietnam said the US$5-billion refinery cannot compete with imports from other ASEAN countries and South Korea, as free trade agreements have given them very low or zero duties.

The giant has asked for further tax breaks for the refinery, but many economists criticized its proposal, saying that as an underperforming business project, Dung Quat does not deserve more support.